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Corporate Bankruptcies in Germany
Recovery Rates in Insolvency Plans
Studienreihe der Stiftung Kreditwirtschaft an der Universität Hohenheim, Vol. 55
(2017)
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Abstract
German corporate bankruptcies are rarely investigated in economic literature. One main reason is the lack of available data. Furthermore, data quality is quite often poor. Thus, despite the high economic relevance, it is very difficult to explore the division of value in corporate bankruptcies or efficiency effects of insolvency law.This study provides a deeper insight into the economics of corporate reorganizations. Theoretical models that were mainly developed for the US legislation are discussed against the background of German bankruptcy law. By analyzing a unique data set of formal reorganization procedures in Germany between 1999 and 2012, the study identifies factors that influence the extent of recovery rates.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Table of Contents | 5 | ||
| Tables | 7 | ||
| Figures | 9 | ||
| Abbreviations | 11 | ||
| I Introduction | 13 | ||
| II Efficiency of Insolvency Laws | 15 | ||
| II.1 Ex-post Efficiency | 15 | ||
| II.1.a Incentives of Stakeholders in Bankruptcy | 15 | ||
| II.1.b Solving Ex-post Inefficiencies | 17 | ||
| II.2 Ex-ante Efficiency | 22 | ||
| III Overview of the German and the US Insolvency Law | 29 | ||
| III.1 German Procedure | 29 | ||
| III.2 US Procedure | 33 | ||
| III.3 Legal Differences between Germany and the US | 34 | ||
| IV Empirical Evidence for Corporate Bankruptcies | 37 | ||
| IV.1 Extent of Recovery Rates | 37 | ||
| IV.2 Influencing Factors on Recovery Rates | 40 | ||
| IV.2.a Firm Recovery Rates | 40 | ||
| IV.2.a.1 Overview | 40 | ||
| IV.2.a.2 Firm Characteristics | 42 | ||
| IV.2.a.3 Procedural Characteristics | 50 | ||
| IV.2.a.4 Macroeconomic Variables | 54 | ||
| IV.2.b Secured and Unsecured Recovery Rates | 56 | ||
| IV.2.c Bank Recovery Rates | 65 | ||
| IV.2.d Summary | 74 | ||
| IV.3 Evidence for Germany | 75 | ||
| V Analysis of German Reorganization Procedures | 79 | ||
| V.1 Research Design | 79 | ||
| V.1.a Data Acquisition | 79 | ||
| V.1.b Data Cleansing and Definition of Variables | 80 | ||
| V.1.b.1 Firm-specific, Procedural and Macroeconomic Variables | 81 | ||
| V.1.b.2 Recovery Rates | 85 | ||
| V.2 Data Analysis | 87 | ||
| V.2.a Descriptive Statistics | 87 | ||
| V.2.a.1 Firm Characteristics | 87 | ||
| V.2.a.2 Procedural Characteristics | 101 | ||
| V.2.a.3 Distribution of Recovery Rates | 105 | ||
| V.2.b Influencing Factors on Firm Recovery Rates | 109 | ||
| V.2.b.1 Hypotheses | 109 | ||
| V.2.b.2 Methodology | 111 | ||
| V.2.b.3 Correlation Analyses | 115 | ||
| V.2.b.4 OLS Regressions | 117 | ||
| VI Conclusion | 125 | ||
| References | 129 |